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Fannie Mae’s High LTV Refinance Option
November 2019
©2019 Genworth Financial, Inc. All rights reserved.
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High LTV Refinance OptionRefinance Opportunities
– Borrowers• Existing Fannie Mae loan• An acceptable mortgage payment history
– Lenders• Automated underwriting and manual underwriting options• Fannie Mae to Fannie Mae refinances
High LTV Refinance Option 1
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High LTV Refinance OptionThe high LTV refinance option provides refinance opportunities to borrowers with existing Fannie Mae mortgages, who are making their mortgage payments on time, but whose LTV ratio for a new mortgage exceeds the maximum allowed for standard limited cash-out refinance transactions.
– The loan must have a note date on or after October 1, 2017– At least 15 months must have passed from the note date of the existing loan to
the note date of the new loan– Desktop Underwriter® will be available to underwrite applications effective
November 1, 2018– Loans must close on or after January 1, 2019
High LTV Refinance Option 2
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www.FannieMae.com
https://www.fanniemae.com/singlefamily/high-ltv-refinance-option
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Know Your Options Loan Lookup Tool
High LTV Refinance
https://www.knowyouroptions.com/loanlookup#
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Eligibility Matrix
5Presentation Title Insert Legal Copy
https://www.fanniemae.com/content/eligibility_information/eligibility-matrix.pdf
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High LTV Refinance Option
High LTV Refinance Option 6
https://www.fanniemae.com/content/fact_sheet/high-ltv-refinance-product-matrix.pdf
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High LTV Refinance Option
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https://www.fanniemae.com/content/fact_sheet/high-ltv-refi.pdf
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High LTV Refinance Option Comparison
http://www.fanniemae.com/resources/file/fundmarket/pdf/refiplus_harp_to_high_ltv_side_by_side_analysis.pdf
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High LTV Refinance Option FAQ’s
9Presentation Title Insert Legal Copy
https://www.fanniemae.com/content/faq/high-ltv-refinance-faqs.pdf
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Borrower BenefitBorrowers must benefit from the refinance in at least one of the following ways:‒ Reduced monthly principal and interest payment‒ Lower interest rate‒ Shorter amortization term‒ More stable mortgage product, such as moving from an adjustable-rate mortgage
to a fixed-rate mortgage
High LTV Refinance Option 10
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Loan PurposeHigh LTV Refinance
– Limited Cash Out Refi (LCOR) only• Payoff of existing first-lien mortgage;• Financing of closing costs, prepaid items, and points (up to $5,000 total) for the new
loan; and• No more than $250 cash back to borrower
High LTV Refinance Option 11
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Allowable Business ChannelHigh LTV Refinance
– Fannie Mae has no restriction on business channel – May be same or different servicer – no restrictions– No portfolio solicitation for product allowed
High LTV Refinance Option 12
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Existing Servicer High LTV Refinance
– The current servicer or a new servicer may refinance the existing loan
High LTV Refinance Option 13
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Underwriting MethodHigh LTV Refinance
– Automated Underwriting (DU®) • DU will determine if the borrower(s) and subject property address on the loan casefile
match an existing eligible Fannie Mae loan– Manual Underwriting
• For manually underwritten loans, the Lender determines if the eligibility requirements are met
• Alternative Qualification Path requires a manual underwrite
High LTV Refinance Option 14
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Minimum LTVHigh LTV Refinance
– Principle residence: 1 unit, 97.01%; 2 units, 85.01%; 3-4 units; 75.01%– Second home: 1 unit, 90.01%– Investment property: 1-4 units 75.01%
High LTV Refinance Option 15
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Maximum LTVHigh LTV Refinance
– No maximum LTV, CLTV, or HCLTV ratios for fixed-rate* loans.– 105% maximum LTV ratio for ARM** loans, but no maximum CLTV or
HCLTV ratio
High LTV Refinance Option
All loan terms may not exceed 30 years
*A fixed rate loan (existing loan may be fixed-rate or ARM)
**An ARM that refinances an existing ARM, the new ARM must have a minimum 5-year fixed rate term
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Subordinate FinancingHigh LTV Refinance
– Existing subordinate financing:• May not be satisfied with the proceeds of the new loan,• Must be resubordinated to the new loan, and• May be simultaneously refinanced, but can not exceed the existing UPB
– New subordinate financing:• Only permitted if it replaces existing subordinate financing
High LTV Refinance Option 17
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Eligible BorrowersHigh LTV Refinance
– Borrowers may be excluded from the new loan for either of the following:• The remaining borrower meets the mortgage payment history requirements and
provides evidence that they have been making the payments on the existing loan from their own funds for the most recent 12 months of the new loan, or
• Death of a borrower, with evidence of the deceased borrower’s death documented in the new file
– Borrowers may NOT be added in the new transaction
High LTV Refinance Option
When a borrower on the loan being refinanced is being excluded from the new loan other than due to death, and the remaining borrower (s) cannot show evidence making payments on their own for the prior 12 months, the loan is subject to the Alternative Qualification Path for the new loan.
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High LTV Refinance– The new loan must meet current general or high-balance loan limits applicable
at the time of delivery
Loan Limits
High LTV Refinance Option 19
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High LTV Refinance– Occupancy
• 1-4 unit primary residences• Second homes• 1-4 unit investment properties
– All property types including:• *Condos• *Co-ops• Manufactured housing• *PUDs
Occupancy and Property Type
High LTV Refinance Option
*The project must no be a condo or co-op hotel or motel, houseboat project, or a timeshare or segmented ownership project. No additional review is required. Confirmation of property, flood and liability insurance coverage is required.
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Payment HistoryHigh LTV Refinance
– No 30-day mortgage delinquencies in the most recent six-month period, and– No more than one 30-day delinquencies in months 7-12
High LTV Refinance Option 21
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Minimum Credit ScoreHigh LTV Refinance
– There is not a minimum credit score requirement, except for loans underwritten under the Alternative Qualification Path
– Significant Derogatory Credit Events• Lenders are not required to comply with the waiting period and re-establishment of
credit or satisfaction of a judgement identified on the credit report• Lenders are not required to review or consider 1003 Declarations (a-f) in the
underwriting evaluation
High LTV Refinance Option
Current Representative Credit Score Required At Loan Delivery
For Pricing Purposes
If underwritten under the Alternative Qualification Path, a minimum credit score of 620 is required
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Maximum Debt-to-Income RatioHigh LTV Refinance
– There is not a maximum debt-to-income ratio, except for loans underwritten under the Alternative Qualification Path
High LTV Refinance Option
If underwritten under the Alternative Qualification Path, a maximum of 45% DTI is required
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Income DocumentationHigh LTV Refinance
– You must obtain one of the following:• A Verbal Verification of Employment (VVOE) for employment or self-employment
income for at least one borrower,• Documentation of a non-employment income source, or• Documentation of liquid financial reserves, equal to 12 months of the new monthly
housing payment– Lenders are not required to assess continuity of income
High LTV Refinance Option 24
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Asset DocumentationHigh LTV Refinance
– Assets do not need to be verified, except for loans underwritten under the Alternative Qualification Path
High LTV Refinance Option
If underwritten under the Alternative Qualification Path, verification of assets to close is required
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For certain loans, DU will offer a Property Waiver (PW)– If utilizing the PW, special feature code 807 must be used
Otherwise, an appraisal with an interior and exterior inspection is required
– If an appraisal is obtained, it must be usedFor manually underwritten loans, an appraisal with an interior and exterior inspection is required
Valuation
High LTV Refinance Option 26
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Mortgage Insurance
High LTV Refinance Option 27
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Loan-Level Price Adjustment (LLPA) Matrix
https://www.fanniemae.com/content/pricing/llpa-matrix.pdf
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Lenders may not solicit Fannie Mae loans for refinancing, except in accordance with standard requirements, per the Selling Guide B2-1.2-04, Prohibited Refinancing Practices.
Solicitation
https://www.fanniemae.com/content/guide/selling/b2/1.2/04.html
High LTV Refinance Option 29
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Alternate Qualification PlanFor the New Loan
30High LTV Refinance OptionHigh LTV Refinance Option
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Alternative Qualification Path for the New Loan
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Alternative Qualification Path for the New Loan
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33Presentation Title Insert Legal Copy
https://www.fanniemae.com/content/guide/selling/b5/7/01.html
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Genworth Rate Express®
Presentation Title Insert Legal Copy 34
mi.genworth.com
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Genworth Underwriting Guidelines
Presentation Title Insert Legal Copy 35
mi.genworth.com
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LOS Connections
Presentation Title Insert Legal Copy 36
mi.genworth.com
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Training Tools and Information
Presentation Title Insert Legal Copy 37
mi.genworth.com
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Training Tools and Information
Presentation Title Insert Legal Copy 38
mi.genworth.com
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Additional MI Site Information
Presentation Title Insert Legal Copy 39
mi.genworth.com
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ActionCenter®: 800 444.5664
Your Local Genworth Regional Underwriter
Your Genworth Sales Representative
Your Genworth Resources
Presentation Title Insert Legal Copy 40
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Legal Disclaimer Genworth Mortgage Insurance is happy to provide you with these training materials. While we strive foraccuracy, we also know that any discussion of laws and their application to particular facts is subject to individual interpretation, change, and other uncertainties. Our training is not intended as legal advice, and is not a substitute for advice of counsel. You should always check with your own legal advisors for interpretations of legal and compliance principles applicable to your business.
,GENWORTH EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIEDINCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THESE MATERIALS AND THE RELATED TRAINING. IN NO EVENT SHALL GENWORTH BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER WITH RESPECT TO THE TRAINING AND THE MATERIALS.
Genworth Mortgage Insurance Offers A Comprehensive Suite Of Training Opportunities To Boost Your Know-How, Benefit Your Bottom Line, And Serve Your
Borrowers Better. Visit mi.genworth.com To Learn More.
Collateral Underwriter®, Home Ready® and Desktop Underwriter® or DU® are registered trademarks of Fannie MaeLoan Product Advisor®, Home Possible®, Loan Collateral Advisor® and Home Value Explorer® (HVE®) are registered trademarks of Freddie MacActionCenter®, Homebuyer Privileges® and Rate Express® are registered trademarks of Genworth Mortgage Insurance
Presentation Title Insert Legal Copy 41